Oct 25, 2006
Operator
Good morning ladies and gentlemen and welcome to the Thermo Electron Corporation Third Quarter 2006 Earnings Conference Call. I would like to introduce our moderator for the call, Mr.
Kenneth Apicerno, Vice President, Investor Relations and Treasurer. Mr.
Apicerno, you may begin the call.
Kenneth J. Apicerno
Thank you. Good morning and thank you for joining us.
On the call today we have Marijn Dekkers, our President and Chief Executive Officer; Marc Casper, Senior Vice President; and Pete Wilver, our Chief Financial Officer. Please be aware that this call is being webcast live and will be archived on our website www.thermo.com until November 24, 2006.
To reach the replay of the call on the website, click on “About Thermo” and then “Investors.” Please also be aware that a copy of the press release setting forth our third quarter 2006 earnings and future expectations is available in the Investor sector of the website under the heading “Press Releases.”
I’d like to begin the call by reading the Safe Harbor statement. Various remarks that we may make about the company’s future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995, and actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in our Form 10-Q for the quarter ended July 1, 2006, under the caption “Risk Factors” which is on file with the Securities and Exchange Commission and available in the Investor section of our website under the heading “SVC Filings.”
While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our estimates change, and therefore you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. During the call we’ll be referring to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP or reconciliation of the non-GAAP financial measures used on this call.
The most directly comparable GAAP measure is available in the press release putting forth our third quarter 2006 earnings and future expectations and in the tables accompanying such releases in the Investor section of our website www.thermo.com under the heading “Press Releases.” Related information is also available in the investor section of our website under the heading “Financial Reports” and then under Reconciliation of Financial Information Q3 2006.
So with that, I’d like to now turn the call over to Marijn.
Marijn E. Dekkers
Thanks Ken, good morning everyone. We’re glad you could join us this morning because we have a lot of good news to share with you today.
It was another strong quarter. We again delivered excellent financial results and we’re also making tremendous progress on our pending merger with Fisher Scientific, which we believe will make us an even stronger company going forward.
Before I comment on the status of the merger let me first review some of the highlights of the quarter with you. As you can read in our press release our growth momentum continued in the third quarter with strong performance across our businesses.
We had a 7% increase in revenues and most of that was organic growth. Adjusted EPS growth was 16% and adjusted operating income growth was 15%.
I’m also pleased to report that we had great expansion of our adjusted operating margin again this quarter, up 110 basis points. We’ve been able to consistently improve our operating margins mainly because we are selling more new products which tend to have higher margins.
Two new products in particular that are doing exceptionally well are our breakthrough Orbitrap Mass Spec system which we introduced last year, and the other one is our ICP series of spectroscopy systems for elemental analysis which we launched at PITCOM this year. We are clearly the technology leader in our industry and are consistently introducing new products across our businesses.
For the year-to-date, our product vitality index, which is the percentage of sales that comes from new product introductions in the last two years, rose to a record 27%. Now, in addition to new products, other factors are also contributing to our ongoing margin expansion.
There is a focus that we have company wide on productivity through our PPI program, there is a focus we have on getting priced across our product lines, and also our ability to achieve synergies by successfully integrating acquisitions is helping our margins. On acquisitions I want to mention that with $1 billion in cash flow after the Fisher merger and a strong balance sheet, we will continue to be active on the acquisition front, especially considering the fact that our industry is still highly fragmented and therefore will likely continue to undergo a fair amount of consolidation.
The majority of our divisions will not be involved in the Thermo-Fisher integration, because this primarily affects our lab equipment and diagnostic product lines. So, those other divisions will be ready to take on an acquisition if there is a good opportunity.
A few comments on the markets – our growth initiatives obviously are being fueled by our major end-markets that are quite strong, and that has a positive effect on both our business segments. Similar to what we’ve been seeing all year, the global industrial markets remain strong, especially commodity materials production, driving demand for the online analysis instruments we provide in our measurement and control segments.
And then sales of our analytical technologies used primarily for research continue to be robust as well in live life and laboratory sciences. Biotech is growing the fastest but our sales to big pharma are also up over last year, and academic markets are showing modest growth.
So, let me say a few words on our pending merger with Fisher Scientific. As you probably saw in our announcement last week, the SEC has cleared the merger with the agreement that we sell Fisher’s $17 million Genevac business.
This means that no further review is needed in the United States. Our last step in completing the merger is to get clearance from the European Commission.
The EC has concerns similar to those of the SEC, so last week we responded to their concerns with the exact same offered selling Genevac. Now, the new deadline for the EC to reply to this offer is November 9th and that is the date we now anticipate that the merger will close.
As we get closer to completion, the excitement surrounding the merger is clearly building, both among our customer and our employees. I’m sure you’ve seen that Fisher reported some excellent third quarter numbers a few days ago.
With Thermo and Fisher both doing so well I don’t think there could be a better time for us to join forces. Together we will transform the life laboratory and health sciences industry so that our customers can more effectively do their important work that leads to a healthier, cleaner, and safer world.
On guidance, before I turn the call over to our CFO Peter Wilbur, let me review our guidance for the rest of the year with you. Based on our excellent performance, we are increasing our 2006 adjusted EPS guidance now to a range of $1.74 to $1.77 from our previous estimate of $1.68 to $1.73.
This accounts for $0.10 per share of stock option expense. The revised guidance would put us 18% to 20% ahead of last year’s results on a pro-forma basis including stock option expense.
We also now expect higher revenues of $2.88 billion to $2.90 billion in 2006 versus the $2.81 billion to $2.86 billion we originally estimated. That would lead to growth of 9% to 10% revenues over 2005.
Now, on top of that, assuming we complete the merger with Fisher on November 9th, we expect $0.01 to $0.03 of accretion to our adjusted EPS in the fourth quarter, and we plan to update our 2007 guidance for the new combined company in mid-December as we’ve done in the past. So with that, I’ll turn the call over to Pete for his financial review.
Pete.
Peter M. Wilver
Thanks Marijn, good morning everyone. Just as a reminder we began reporting our financials including FAS 123R stock option expense beginning in the first quarter of this year.
For purposes of comparison, the prior year consolidated numbers that I will be discussing today have been adjusted on a pro-forma basis to include stock option expense where applicable. In the third quarter, stock option expense was $6.7 million or 0.9% of revenue and approximately $0.03 of earnings per share.
This amount was $1.5 million higher than the prior year on a pro-forma basis, which unfavorably impacted our adjusted operating margin by 20 basis points and our adjusted EPS by approximately 7/10s of a cent. For the full year, our current guidance for Thermo on a standalone basis includes approximately $0.10 per share of stock option expense versus $0.08 per share in 2005 on a pro-forma basis.
As Marijn said, our adjusted EPS for the quarter grew 16% to $0.44 as compared to $0.38 last year. GAAP earnings per share in the third quarter was $0.30, which is lower than adjusted earnings per share primarily as a result of acquisition intangibles amortization, and down from last year’s $0.35 principally due to a gain in the prior year related to the sale of our point of care business and stock option expense, partially offset by our significantly improved operating performance.
Our press release contains a detailed reconciliation between GAAP and adjusted EPS. Revenues in the quarter increased 7% or $46 million year-over-year to $725 million.
Organic revenues in the quarter were up 6% excluding favorable currency translation of 2% and the net effect of acquisitions and divestitures. Bookings again exceeded revenues in this quarter by about 3%.
In life and laboratory sciences, revenues rose 5% both on a reported basis and organically. In the quarter, we saw strong growth in both our life sciences and industrial markets.
Our new product introductions specifically in mass spectrometry and elemental analysis product lines also continued to be a key growth driver. In measurement control, revenues rose 11% on a reported basis and 7% organically.
We saw a strong demand in our commodity materials and industrial markets driven by our online process instrumentation. By regions, Europe and Asia-Pacific both grew in the high single digits and China grew at over 15%.
North America was up slightly and the rest of the world rebounded from last year to grow at over 30%. Adjusted operating income increased 15% or $14 million year-over-year to $108.7 million.
Adjusted operating margin was 15%, up 110 basis points from 13.9% in the year ago quarter. As I mentioned previously, stock option expense was $6.7 million in the third quarter, which was $1.5 million or 20 basis points higher than the prior year.
Stock option expense is not allocated to this segment for adjusted reporting purposes. Life and laboratory sciences adjusted operating income increased by 13% year-over-year and adjusted operating margin was 18.3%, up 120 basis points versus 17.1% last year.
The increase in margin rate was primarily attributable to pull through on incremental organic revenues, price increases net of inflation, and the benefit of our sourcing and productivity initiatives. In measurement control, adjusted operating income increased by 28% and adjusted operating margin increased by 190 basis points to 14.2% versus 12.3% in the prior year.
The increase in margin rate was primarily attributable to productivity improvements, price increases net of inflation, and pull through on incremental organic revenues. Adjusted gross margin was 46.7%, up 150 basis points from 45.2% in the year ago quarter, primarily driven by price increases net of inflation and the benefit of our sourcing and productivity initiatives.
SG&A was 26.4% of revenue in the third quarter, up 90 basis points from the year ago quarter. The increase was primarily driven by a nonrecurring pension adjustment as well as a slight shift in our revenue to businesses with a higher percentage of direct sales.
We expect SG&A as a percentage of revenue to return to recent historical levels in the fourth quarter. R&D was 5.3% of revenue in the third quarter, down 50 basis points from the year ago quarter; however, we’re continuing to improve the efficiency and effectiveness of our R&D spend as evidenced by our growth from new products and our strong product vitality index that Marijn commented on.
Our adjusted tax rate for the quarter was 30.6%, which is in line with our previously communicated full year forecast rate of 31%. This year’s rate is 2% lower than last year’s third quarter adjusted rate of 32.6%, primarily as a result of the year-to-date adjustment in the prior year related to the estimated impact of a change in U.K.
tax law. The lower tax rate resulted in about $0.01 year-over-year increase in adjusted earnings per share.
Net interest expense was essentially flat over the prior year and other income decreased $2.7 million or about $0.01 per share due to lower securities gains. Average diluted shares were down 2.1% to 162.2 million shares reflecting the full benefit of the shares we bought back late in the second quarter.
The lower share count contributed about $0.01 to adjusted EPS versus the prior year. In terms of the balance sheet, we ended the quarter with $173 million in cash and investments, down $25 million from the second quarter.
This decrease was driven primarily by paying down our short-term borrowings and partially offset by strong operating cash flow. Our debt was down $100 million versus the second quarter to $539 million, primarily as a result of paying down our short-term borrowings as I just mentioned.
Receivables DSO came in at 67 days, a 1-day improvement versus both the prior year and prior quarter, and inventory days of supply were also down 1 day as compared to the prior year to 95 days. We expect these favorable trends to continue and are driving to improve our working capital metrics by at least 5% during 2006.
Cash flow from continuing operations in the third quarter were strong at $101.1 million. After deducting net capital expenditures of $8 million, operating cash flow from continuing operations was $93 million.
This amount is $47 million higher than the prior year, primarily as a result of improved working capital performance and higher adjusted net income. So, let me just review with you the guidance that we have on our press release.
Based on our excellent operating performance, we are increasing our full year 2006 adjusted EPS guidance to a range of $1.74 to $1.77 from our previous guidance of $1.68 to $1.73 including $0.10 of stock option expense. This range represents an 18% to 20% increase over our pro-forma 2005 adjusted earnings of $1.47.
We’re also increasing our full year reported revenue guidance to a range of $2.88 billion to $2.9 billion, which is 9% to 10% increase above 2005, reflecting our year-to-date growth performance. This guidance does not include any benefit from the Fisher merger.
Assuming we complete the merger on November 9th, we expect accretion to our adjusted EPS of $0.01 to $0.03 in the fourth quarter. This would translate to $0.06 to $0.08 accretion for the full year due to the favorable effect of our full year weighted average shares on the incremental earnings from Fisher in the fourth quarter.
In summary, this was another excellent quarter for us operationally. We again exhibited our ability to expand adjusted operating margins and we’re on track to achieve our 2006 margin expansion goal of well above 100 basis points.
We also grew our revenues driven by strong new product introductions and healthy end-markets. Overall, these results position us well for a strong finish to the year.
With that I’ll turn it over to questions.
Marijn E. Dekkers
Operator, we’ll take questions now.
Operator
At this time, if you would like to pose a question press * then the number 1 on your telephone keypad. In order to allow everyone in the queue an opportunity to address the Thermo Electron management team, I would like to ask that you limit your time on the call to one or two questions.
If you have additional questions please return to the queue and pose your questions in turn. We’ll pause for a moment to compile the Q&A roster.
Your first question is coming from Ross Muken of Deutsche Bank.
Ross Muken
Good morning gentlemen. I feel like a broken record but congratulations again on another solid quarter.
As we look to the end-markets I want to dig in here a little bit deeper and I want to really focus on two, one being pharma and the other being industrial with more of a commodity tinge. Can you talk about, one, some of the management changes at pharma and some of the rhetoric coming out of them would suggest that there is some more belt tightening to occur; however, yourselves as well as some of your peers have talked about potentially an acceleration there or at least a small improvement, could you comment on sort of what you think that those management changes mean and whether the dollars are matching up with the rhetoric?
And then on the commodity side, clearly MNC had another very solid quarter, what’s the visibility there and where do you think we are right now in that cycle?
Marijn E. Dekkers
Ross, this is Marijn. On pharma first, we saw good growth in pharma in the third quarter, getting cautiously stronger and in spite that the year-over-year comparison within pharma is getting a little tougher as well.
If you remember last year, the first two quarters were very weak in pharma and then started picking up in the third quarter, so to have good growth in pharma over the third quarter last year I think is encouraging. If you ask me to comment on the specific strategies of pharma companies, it’s very hard to do because even — and I mentioned this in the past — even companies by reading from the paper don’t seem to be doing that well could still grow significantly with us depending on the specific technology needs they have.
So, we’ve seen in the past very good growth with companies that you would think would be tightening their belt. They did tighten their belt overall but not with our specific products.
So, it’s very hard to go one by one and make sense necessarily of it, but overall I would say it’s an encouraging trend that the spending is up over the third quarter of last year. On the MNC front, we are talking particularly commodity material here which is the sort of the uncertain part of the demands there, you know and we’ve said this before as well that we are lagging the overall industry there by two or three quarters.
So, it’s very hard for us to predict what exactly is going to happen with commodity materials going forward, but we do know that we have visibility out two to three quarters of robust demand.
Ross Muken
And quickly on the new products, clearly you guys have been exceptionally good at putting out new instruments specifically in the mass spectrometry market which has helped you gain share there, could you talk about sort of where we are in that cycle? It’s been I feel a significant amount of time since you’ve had an above-market growth there, how much longer do you think you can continue that and are there any changing market dynamics in any of the more specific areas that you introduced new products at this year’s ASMS?
Marijn E. Dekkers
Our mass spec business is doing very, very well. We have obviously a wonderful set of new product technologies introduced in the last zero to two years there.
Actually this quarter we came out with the LTQ FT Ultra, which is the highest end mass spectrometer we sell with again much, much improved performance over the original one we introduced three years ago. So, even with these product lines we can continue to optimize and innovate to make an existing model still significantly better.
As you know, we’ve done some investments over the last few years in acquisition of the FAIMS technology which is very promising for Triple Quad technology. So I think as long as our customers have a need for improved sensitivity and accuracy, and we know they do have significant needs in that area, we will be able to come out with improved versions or new technologies that help them to do their research better.
So, I don’t think this trend is going to stop any time soon, because I believe that customers are still demanding improved capabilities from us.
Ross Muken
All right, thanks guys.
Operator
Thank you. Your next question is coming from Derik De Bruin of UBS.
Derik De Bruin
Hi, thank you very much. As you near the close of the Fisher acquisition, could you just comment on having seen anything in terms of surprising you either to additional synergies or are you going to save all these comments for the analyst meeting?
Marijn E. Dekkers
I think I will save a lot of the comments for the analyst meeting obviously, because that’s when we really can talk about the combined company and that’s the time when we will have gone through the operating plans of both companies and know exactly what is lining up for 2007. But I would say overall there have been no surprises in the sense of things we didn’t know about each other before we decided to merge.
The cooperation has been excellent. We’ve had a significant number of meetings planning the integration, planning day one, and we’re completely on target in terms of synergies and completely on track to have a day one somewhere in November.
So, it has been extremely positive and we’re really pumped about it. The management teams who are going to be responsible for the combined company are in place, the organization has been announced internally, so we’re completely lined up to get this done by November and hit the ground running.
Derik De Bruin
Great. You’ve talked about that you’re still going to have certainly significant operating cash flow, could you just talk about potentially where you see the leverage of the company using some of the cash to pay down debt?
Also, you’ve certainly mentioned acquisitions and consolidating, do you think that businesses such as chromatography are still potentially of interest as well?
Peter M. Wilver
In terms of usages of cash I think we’re pretty consistent with the way we’ve looked at it in the past. Certainly number one would be acquisitions, number two is share buybacks, and at this point we wouldn’t be in a situation where we would want to be buying down our debt.
We’re pretty comfortable with the leverage of where we are today, so I would say acquisitions and then share buybacks are the number one and number two. I’ll let Marijn comment on chromatography or other acquisition candidates.
Marijn E. Dekkers
Yeah, obviously now in the combination with Fisher we’re going to have a broader interest, if I can call it that way, in terms of the type of acquisitions we would be interested in doing. Fisher has traditionally been very focused on consumables and services, we’ve been focused on more hardware and software acquisitions, and now the combined company will have an opportunity to do a mix of both of these types of acquisitions.
So, the prioritization will be a little bit more difficult I think than when we were standalones, but you know it’s a very fragmented industry still and there are opportunities. I think it gets harder to be a smaller company as consolidation is happening.
So, I think some smaller companies will look at how the industry is changing and say “Do I really want to go this alone or am I better off partnering up with one of the larger companies?” So, I believe there will be a lot of opportunity for us to do acquisitions and we’ll be as careful as we’ve always been in evaluating them and picking the right one.
Derik De Bruin
Great, thanks a lot guys.
Operator
Thank you. Your next question is coming from Jason Weiss of Robert W.
Baird.
Jason Weiss
Hi, good morning. I know you said you’re going to put a lot off until the analyst day, but I’m curious about the combined tax rate, how you anticipate that happening, there’s a pretty big gap between the effective tax rate Fisher shows and you show, and could you give us a little guidance on how to think about that?
Peter M. Wilver
Well, in terms of the 2006 accretion that we talked about, that’s simply a weighted average of what Fisher has forecast for the fourth quarter portion that we would own them and then our forecast for the fourth quarter. Going into 2007, I really don’t want to comment on what the tax rate might be.
As Marijn said, we haven’t gone through the detailed operating plans of the two companies. The tax rate is a very complexed calculation and requires a lot of diligence to come up with that number, so at this point I don’t want to comment on it.
Jason Weiss
Okay, thank you very much, I’ll get back in the queue.
Operator
Thank you. Your next question is coming from Tycho Peterson of JP Morgan.
Tycho Peterson
Good morning, thanks for taking the call. On the instrument front, you guys expanded your portfolio in the HPLC business with Accela this year, can you just comment a little bit on how that’s doing and how much pull through you’re seeing with some of the mass spec shipments?
Marijn E. Dekkers
We introduced Accela in May at ASMS, so Accela is now commercially available, is being evaluated by our customers. The feedback is excellent and in many cases we are compared directly to our competitors who have high pressure and fast HPLCs and we do very well in those comparisons.
Now, it’s too early to say that we got all these orders because we’re obviously commercializing it, but if asked that question again I would say next quarter or the quarter afterwards, because we will then have more to talk about in terms of specific results, but the first response is very positive.
Tycho Peterson
Okay great, one thing that Waters had highlighted yesterday in their results was some of the growth they’re seeing on the CRO and generic manufacturing front, can you comment on how you view that opportunity, are those opportunities?
Marijn E. Dekkers
Those are huge opportunities, both of them, they’re very different obviously, the CROs because big pharma have a trend to outsource more so CROs then get that work and they need to build laboratories, which is good for us. And generic pharma is obviously competing with big pharma and is also realizing more and more that they want to do their own research.
It’s actually very interesting to see that generic pharma is in some cases changing its model from just copying drugs to also beginning to try to invent and develop drugs, which is something that they haven’t traditionally done. They’re putting an infrastructure in place to support that, which means new laboratories, but it will be interesting to watch how good they are really going to be at doing that, because it’s a very different skill obviously than copying a drug after the patents expire.
But to us it’s all good news; I mean the more people are doing research in this area and the more people are building laboratories or expanding their laboratory footprints the better it is for us.
Tycho Peterson
Okay great. Then finally on the low-cost sourcing initiatives, you had I think talked about $14 million in components from lower cost countries and about $4 million in savings for this year, is that still accurate and could you give us a little bit of a broad brush stroke as to how you view the opportunity for Fisher?
Marijn E. Dekkers
You have a good memory Tycho. That’s right, we have a sourcing organization of over 40 people in Shanghai and what they’re doing is they’re obviously sourcing for those instruments that we are now producing in Shanghai rather than in the western factories.
So that’s our first task to do local sourcing for the local production, but while they’re at it they’re also sourcing parts for instruments that we make in the western part of the world. So, the combination of that is leading to significant savings and the rough number is that we can save if once we’ve qualified a part, whether it’s a printed circuit board or some other part that goes into an instrument, we save about 35% from sourcing it in China versus the western countries, so it’s very significant.
And this will only get higher and the number will only increase as we are going forward, because this is just really the beginning, we’re scratching the surface. From a Fisher point of view, there is also a benefit there.
It’s easier though to do sourcing for parts that are used in hardware than for materials that are used in consumables. So, you don’t easily go and buy a truck load of resin in China and then mold it in New Hampshire, if you know what I mean.
You can do that easier with a consolidative part. But, the opportunity is there and we’ll certainly benefit from that capability in the new company.
Tycho Peterson
Okay, thank you very much.
Operator
Thank you. As a reminder if you would like to pose a question press * and then the number 1 on your telephone keypad.
Your next question is coming from Paul Knight of Thomas Weisel Partners.
Paul Knight
Hi Marijn.
Marijn E. Dekkers
Hi Paul.
Paul Knight
Could you talk about your thought on the measurement and control backlog? I know we always think that it’s got a nine-month window at the very least, where are you with that?
And then on a product specific item, NITON Analyzer, I think that’s been a great product for you, how is it now today?
Marijn E. Dekkers
On the visibility, it goes back to how much visibility we have in commodity materials. We went through this cycle in 2000-2001 with measurement and control when the economy was very strong, and we back then had a two to three quarter sort of runway left when the economy clearly started deteriorating and commodity material prices were falling.
So, I’ve said before, if it would also apply today I still think we have two or three quarters on it, but I don’t really see it all fall apart today, because the global demand picture in commodity materials with China and India being so strong now, it’s really quite different than it was in the last cycle six years ago. So, we’ll see what happens but for the next two or three quarters we’re okay for sure in this area.
Your second question on the NITON Analyzers and that has been a great success story for us. We acquired NITON in the spring of last year.
They’ve grown tremendously. They have wonderful products and are right in the sweet spot of our customers who want to analyze complex metals outside of the laboratories.
So, there has been some regulation changes in the European Commission with respect to how to deal with scrap metal and that has helped us, and overall the technology is so good now of these NITON Analyzers that people just do the testing in the fields and don’t even bother to bring these samples back to the lab, and it has really been terrific from a growth point of view.
Paul Knight
Okay, thank you.
Operator
Thank you. Your next question is coming from John Sullivan of Leerink Swann.
John Sullivan
Hey guys good morning. Pete, can you just go over again the growth in the quarter geographically?
Peter M. Wilver
Sure. North America was up slightly, both Europe and Asia-Pac were in the high single digits, and then the rest of the world which is obviously a very small number for us in an absolute sense was up over 30%.
John Sullivan
Okay, in that high single digit for Asia-Pac, did you China up 15%?
Peter M. Wilver
China was up 15%, yes.
John Sullivan
Did you comment on India?
Peter M. Wilver
I didn’t comment on India, but it was up about the same as China, 15% to 16%.
John Sullivan
Okay, and then any specific comment on Japan?
Peter M. Wilver
Japan was actually up pretty strong; they were a driver in that number for Asia-Pac.
John Sullivan
Thanks very much.
Operator
Thank you. There are no further questions at this time.
I would like to turn the floor back over to management for any closing remarks.
Marijn E. Dekkers
Well, just let me say in closing that the third quarter was obviously another strong quarter for Thermo with good growth across the company. Fisher also had a strong quarter reporting record sales and earnings, and therefore we believe this is an ideal time for both companies to join together and it will mark the beginning of a new and exciting chapter in our history.
Thank you for your continued support, thanks for being on the call today.
Operator
Thank you. This concludes today’s Thermo Electron conference call.
You may now disconnect your lines at this time and have a wonderful day.